SEC sends crypto custody plan to OMB

TLDR

The SEC has sent a major crypto custody rule proposal to the White Houses budget office for review, a key step toward formal rules on how advisers can hold digital assets.

1. The proposal, titled Amendments to the Custody Rules, reached the Office of Management and Budget on 25 August and is tagged as an economically significant, deregulatory rule.
2. It aims to clarify how registered investment advisers and funds can custody crypto, potentially easing qualified custodian constraints and modernizing outdated requirements that never anticipated private keys or blockchains.
3. Next milestones include OMB review, an expected October publication with a public comment period, and eventual SEC adoption that will shape which institutions can safely and legally hold client crypto.

Deep Dive

1. What The SEC Just Did

Multiple reports confirm the SEC has advanced its proposed Amendments to the Custody Rules to the White House Office of Management and Budget (OMB) as of 25 August 2026, specifically to the Office of Information and Regulatory Affairs for review. This filing is labeled economically significant and categorized as deregulatory under President Trumps Executive Order 14192, signaling expected annual economic impact over 100 million dollars and an intent to loosen rather than tighten some requirements. These changes target custody rules under the Investment Advisers Act and Investment Company Act, with publication of a draft rule tentatively aimed for October, after which the text would be open for public comment.

2. How It Could Change Crypto Custody

Today, registered investment advisers generally must use qualified custodians, usually banks or broker dealers, and few are set up to handle crypto, which limits compliant exposure for clients. The new rule aims to clarify how advisers and funds can hold digital assets, including recognizing modern arrangements like multi signature or multi party computation wallets, while retiring provisions written before crypto existed. Coverage notes that the rule is framed as deregulatory, which suggests more flexible pathways for compliant custody rather than stricter walls, especially compared with the earlier Safeguarding rule that was withdrawn in 2025.

3. Timeline And What To Watch

During OMB review, agencies and industry can request meetings and push for changes, and the rule text can still be revised before it returns to the SEC. Once OMB signs off, the SEC must vote to publish the proposal, triggering at least a 60 day public comment period and a later vote on a final rule, likely placing any effective date in late 2026 or beyond. This custody rule sits alongside other initiatives like Regulation Crypto Assets and stalled legislation such as the CLARITY Act, so the final framework will reflect both agency rulemaking and how far Congress goes on broader market structure.

Conclusion

The SECs decision to send its crypto custody overhaul to OMB marks a meaningful pivot from ad hoc enforcement toward formal rules on who can safely hold client digital assets and how. If the final rule indeed takes a deregulatory, modernization focused approach, it could lower legal friction for institutions that want to custody crypto while still imposing clear standards for safeguarding client funds. The key question now is whether the final text genuinely expands compliant options or simply reshuffles existing constraints under a new label.